By Hadassa Kalatizadeh
The popular trend for smart Hamptonites has become to tear down existing homes, and build the maximum square footage permitted by zoning on a new build. As reported by the NY Post, posh East End investors can easily double their investment by buying, demolishing and rebuilding a larger home. “When you have chronically low supply and prices rising rapidly, landowners become a lot more creative,” says Jonathan Miller, real estate analyst and CEO of Miller Samuel Real Estate Appraisers. “Existing properties become a target regardless of what was on the land. Whether it was renovated or looked like a teardown, it became replaceable. It’s always about the land in the Hamptons. It’s the land that appreciates.”
Home prices have already soared in the Hamptons and inventory is at record lows. Before the pandemic, there were about 1,900 homes listed in the area, now there are just 700 to 800 listings. Demand has jumped roughly 90% this summer when measure by closed contracts, says Compass broker Adrianna Nava, who founded ‘Hamptons Market Data’, a regional market trend tracking service. For East Enders, buying and demolishing perfectly good homes is not considered a waste.
Even historical homes with architectural significance are quickly becoming extinct. The most attractive preys are modest homes in good neighborhoods or large lots. Sellers can even demand higher prices if they advertise their properties as knock-downs rather than giving the home details. The market conditions just make it too lucrative to demolish, since rebuilding can add so much value. “It can sometimes feel shocking what we consider a teardown,” said Bespoke Real Estate Managing Director Joseph De Sane. “But the reality is, if I can sell you a beautiful piece of land with a 10-year-old house for $6 million, you can take it down and build a contemporary home for another $6 million or $6.5 million, and that same property can come to market for $14 million.” The same is not true in other luxury markets, explains De Sane. “It’s not a frivolous endeavor to tear down a home. It actually makes business sense,” he added.
“I think a lot of opportunities are missed when you purchase a home to live in it as is, especially when the market is red-hot,” said real estate broker Jade Shenker Denham, 26, who is looking for a Hamptons home to buy and rebuild. “To renovate within a house’s current confines would actually be a bad investment, essentially run at a deficit and cause major construction delays.”